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Environmental Pricing for Energy Generation Sources: Evidence from a Contingent Valuation Study in Chile

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  • Claudia D. Aravena

    (Queens University Belfast , UK)

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    Abstract

    The rapid increase in energy demand in Chile requires a choice for additional production between different kinds of energy sources currently available to the country. Current projects to develop large dams for hydropower in Chilean Patagonia impose an environmental price by damaging the natural environment. The increased use of fossil fuels on the other hand entails an environmental price related to emissions and global warming. This paper studies the debate on the future energy supply in Chile by investigating the preferences of households for different energy sources (fossil fuels, large hydropower in Chilean Patagonia and renewable energy). The paper also aims to value the externalities associated to these traditional methods of energy generation. Using the Contingent Valuation method, the willingness to pay for renewable energy sources over the other alternatives is elicited. Results suggest a strong preference for renewable sources with almost equally large environmental prices imposed by consumers on electricity from large dams and thermoelectric sources. Results also suggest possibility of introduction and promotion of incentives for renewable energy developments supported by consumers through green tariffs or environmental premiums. Key words: contingent valuation, willingness to pay, renewable energy, fossil fuels, hydropower

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    Bibliographic Info

    Paper provided by Latin American and Caribbean Environmental Economics Program in its series Working Papers with number 201016.

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    Length: 37 pages
    Date of creation: Oct 2010
    Date of revision: Oct 2010
    Handle: RePEc:lae:wpaper:201016

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